AN SUPPLY AGREEMENT BETWEEN ORICA USA INC. AND EL DORADO CHEMICAL COMPANY NOVEMBER 1, 2001

24.0 Headings                                                                                                                 37

25.0 Rules of Interpretation                                                                                             37

26.0 Governing Law                                                                                                         37

27.0 Assignment                                                                                                              37

28.0 Time of Essence                                                                                                     38

29.0 Effect of this Agreement                                                                                         38

30.0 Waiver                                                                                                                      38

31.0 Amendment and Severability                                                                                 38

32.0 Entire Agreement                                                                                                     38

33.0 Conflicts                                                                                                                     39

Schedule "A"                     Definitions
Schedule "B"                     Product Specifications
Schedule "C"                     Manufacturing Fee Calculation, Additional Costs and Additional
                                            Fee Calculation
Schedule "D"                     Liquidated Damages Calculation
Schedule "E"                     Measurement of Ammonia, Ammonium Nitrate and Additive Deliveries
Schedule "F"                     Types of Unusual Incidents to be Reported to Orica
Schedule "G"                     Receipt and Unloading of Ammonia and Additives
Schedule "H"                     Form of Warehouse Lease

This AN Supply Agreement is made as of the 1^st day of November, 2001

            ORICA USA INC.,
            a corporation incorporated under the laws of Delaware
            ("Orica")

            EL DORADO CHEMICAL COMPANY,
            a corporation incorporated under the laws of Oklahoma
            ("EDC")

(a) Orica desires to supply quantities of Ammonia and Additives to EDC for manufacturing by EDC into AN Prills and AN Solution for delivery to Orica; and

(b) EDC desires to receive Ammonia and Additives from Orica and to manufacture such Ammonia and Additives into AN Prills and AN Solution for delivery to Orica.

NOW THEREFORE, in consideration of the mutual covenants contained in this Agreement, Orica and EDC agree as follows:

Schedule "A"             Definitions
Schedule "B"             Product Specifications
Schedule "C"             Manufacturing Fee Calculation, Additional Costs and
                                    Additional Fee Calculation
Schedule "D"             Liquidated Damages Calculation
Schedule "E"             Measurement of Ammonia, Ammonium Nitrate and Additive Deliveries
Schedule "F"             Types of Unusual Incidents to be Reported to Orica
Schedule "G"             Receipt and Unloading of Ammonia and Additives
Schedule "H"             Form of Warehouse Lease

 2.0    TERM  

2.1    This Agreement shall become effective as of November 1, 2001 and, unless earlier terminated in accordance with the provisions hereof, shall continue for an initial term ("Initial Term") ending December 31, 2006. Thereafter, unless earlier terminated in accordance with the provisions hereof, the term of this Agreement shall automatically extend for one year periods on the anniversary of the last day of the Initial Term (as so extended, the "Term"). Either party may, at any time, deliver a written notice of termination to the other; provided that, except as provided in Section 16 hereof, the effective date of termination shall never be earlier than December 31, 2006 and such notice shall be given at least 2 years prior to the intended date of termination. For example only, if Orica or EDC gives the other notice of termination on July 15, 2005, the effective date of termination would be July 15, 2007.

2.2   During the period November 1, 2001 to November 30, 2001, the parties will prepare for the full implementation of this Agreement in accordance with the terms hereof. During that period, EDC shall manufacture Ammonium Nitrate for Orica pursuant to the terms of this Agreement. At the request of Orica, EDC shall arrange for the supply of Ammonia for manufacturing into Ammonium Nitrate during this period, and Orica shall reimburse EDC in accordance with Section 3.1.3. The quantity and supply commitments and related obligations of Orica and EDC hereunder including, without limitation, those in Section 4 and Schedule "D" hereto, shall commence on November 1, 2001.

2.3    Notwithstanding the termination of this Agreement, the unfulfilled rights and undischarged obligations of the parties that accrue during the Term shall continue following the termination hereof until fulfilled or discharged.

3.1    Until at least 60 days after the date, if any, that Orica has given EDC notice of its intention to supply Ammonia for toll manufacturing into Ammonium Nitrate, EDC shall acquire and supply Ammonia for manufacturing into Ammonium Nitrate for Orica pursuant to the terms of this Agreement. Orica shall give EDC at least 45 days' advance notice of the quantities of Ammonia to be acquired and used by EDC for manufacturing AN for Orica. To the extent Ammonia is available from EDC's supplier or suppliers at costs acceptable to Orica (which shall not exceed EDC's acquisition cost from its Ammonia supplier), EDC shall acquire such Ammonia for use to manufacture AN for Orica under this Agreement for such periods and in such amounts as shall be requested by Orica. Subject to Section 3.2 hereof, notwithstanding any other provision of this Agreement and unless otherwise agreed in writing, EDC shall not be obligated to supply Ammonia hereunder for the manufacture of AN for Orica upon the earlier of a) December 31, 2002 or b) the date specified in a

notice by Orica to EDC for EDC to cease supplying Ammonia to Orica. In the event that EDC's Ammonia supplier fails to supply Ammonia to EDC for the manufacture of AN for Orica the Minimum Quantity and Liquidated Damages (as defined in Schedule D hereto) shall be reduced insofar and only insofar as (x) such failure is due to an act or omission of EDC or the breach by EDC of the supply contract with the Ammonia supplier or (y) EDC is able to recover insurance proceeds to cover its Claim associated with the non-delivery of such Ammonia and then only to the extent of such net recovery after payment of applicable deductibles. Except as provided in the preceding sentence, there shall be no other consequence to EDC for failing to deliver Ammonia as provided hereunder.

3.1.2    If from time to time Orica is unable to supply the Ammonia as required herein, or EDC is unable to acquire sufficient Ammonia from its supplier when EDC is supplying Ammonia to Orica in accordance with Section 3.1 hereof, Orica may request EDC to utilize EDC's Ammonia stored at the EDC Site intended for the production of products other than AN, and upon such request and to the extent EDC has available undedicated Ammonia, EDC shall supply such Ammonia for use under this Agreement.

be manufactured by EDC for Orica, EDC will require *** of Ammonia; provided that for the purposes of Schedules "C" and "D" hereto, subject to process changes necessary to comply with changes in applicable Law after the date hereof, the conversion efficiency shall be the lesser of ***.
 

***INDICATES INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED FROM THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION.  THE OMITTED INFORMATION HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION FOR PURPOSES OF SUCH REQUEST.

EDC locates a new additive supplier and enters into alternative supply arrangements, provided that this period shall not exceed 180 days. The price of the Additives to EDC during the transition period will be equal to the market price of alternative additives.

4.1    During the Term, EDC shall commit the full manufacturing capacity of the IGAN Plant to the manufacture of AN for Orica under this Agreement. For the purposes hereof, EDC and Orica agree that such manufacturing capacity is a nominal 200,000 Tons per annum (180,000 Tons for Orica and up to 20,000 Tons for SEC in accordance with Subsection 4.2 hereof). However, in any given Year absent an event of Force Majeure, the parties contemplate the EDC Plant shall be capable of manufacturing between 192,000 and 240,000 Tons of AN, with the utilization of the Additional Technology. EDC shall use its commercially reasonable efforts to ensure that the EDC Plant is capable of a manufacturing capacity of a minimum of 192,000 Tons of AN per year at all times during the Term, and that sufficient nitric acid manufacturing capacity at the EDC Site is at all times during the Term made available to allow the manufacturing of between 192,000 and 240,000 Tons of AN, provided Orica supplies, directly or through EDC, the necessary Ammonia and Additives to the EDC Site. During the Term, EDC shall operate the EDC Site in substantial compliance with all applicable Laws and good industry practices, and with all agreements relating thereto or by or to which EDC is bound or a party. The parties acknowledge and agree that Orica shall not participate in, or have any control over, the AN manufacturing process.

4.3    Orica shall pay to EDC the Manufacturing Fee calculated in accordance with Schedule "C" hereof for each Ton of Ammonium Nitrate delivered to Orica which conforms to the Specifications set forth in Schedule "B" hereto and

***INDICATES INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED FROM THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION.  THE OMITTED INFORMATION HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION FOR PURPOSES OF SUCH REQUEST

otherwise in accordance with this Agreement. Orica shall also pay to EDC ***as set forth in Schedule "C" hereto.

4.3.2    Provided that Orica timely supplies Ammonia and Additives in the quantities required and meeting the quality specifications set forth in Schedule "B" hereto, and Orica is otherwise in compliance with this Agreement, EDC shall deliver to Orica AN Solution and AN Prills produced by EDC in the quantities and at the times provided for herein, except to the extent excused by the terms of this Agreement or any federal Law prohibiting or preventing the manufacture of AN generally, but in no event at a rate in excess of the operating capacity of the EDC Plant and quantities that can be shipped from storage.

4.4.    The Ammonium Nitrate supplied to Orica shall be in the form of AN Solution and/or AN Prills, as designated by Orica at least 15 days in advance of the first day of a production Month. EDC and Orica acknowledge that the mix of AN Solution and AN Prills designated by Orica may vary from Month to Month but in no event shall the AN Prills volume designated by Orica exceed the aggregate of (a) the IGAN Plant capacity plus (b) the AN Prills in storage in the AN Prills Warehouse (as defined in Section 4.6 below) available to Orica, less (c) the volume of AN Prills to be supplied to EDC for resale to SEC. For purposes of the AN to be delivered under this Agreement, one Ton of AN Solution, on a 100% basis, shall be deemed the equivalent replacement of one Ton of AN Prills.

***INDICATES INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED FROM THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION.  THE OMITTED INFORMATION HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION FOR PURPOSES OF SUCH REQUEST

4.6    The parties acknowledge that EDC does not presently have a warehouse for the storage of AN Prills. Promptly after the date hereof, provided that the parties have agreed upon the contract for its construction and Orica shall have provided credit support in the form of a letter of credit as set forth in Schedule "C", EDC shall construct, at its cost, an AN Prills warehouse as more specifically provided in Section 12 hereof (the "AN Prills Warehouse"), with the cost thereof to be recovered as provided in Part 8 of Schedule "C" hereto. Prior to completion of the Modifications (as defined below), all AN Prills supplied to Orica shall be manufactured using EDC's current technology, and shall meet the specifications set forth in Part I of the AN ▇▇▇▇▇ Specifications set forth on Schedule "B" hereto (the "Interim ANP Specifications"). After (a) completion of the AN Prills Warehouse, (b) EDC's implementation of the use of Orica's Additive, and (c) installation by EDC of a chiller as a pre-cooler at the EDC Plant (which are collectively called Modifications and shall, subject to the foregoing provisions of this Section 4.6, be undertaken by EDC promptly after the date hereof), the specifications set forth in Part II of the AN Prills Specifications set forth in Schedule "B" hereto (the "Final ANP Specifications") shall apply to AN Prills delivered to Orica hereunder. Orica's rights and EDC's liabilities and obligations with respect to AN Prills which do not meet the Interim ANP Specifications or Final ANP Specifications, as applicable, shall be governed by Section 8.1.

5.1    EDC represents and warrants to Orica that:

lease the properties and assets it currently owns and leases, including at the EDC Site, and to conduct its activities as such activities are currently conducted,

5.2    Orica represents and warrants to EDC that:

by Orica have been duly and validly authorized by all necessary action on the part of Orica (including approval by the board of directors and shareholders of Orica), and this Agreement has been duly and validly executed and delivered by Orica, and is the valid and binding obligation of Orica, enforceable against Orica in accordance with its terms, subject to applicable laws of bankruptcy, insolvency and similar laws affecting creditors' rights and remedies generally.

thereafter to make required payments hereunder. The Statement shall specify the amount of the draw and that an uncured default exists under a specified Section of this Agreement, and shall be accompanied by a sight draft. EDC shall not be required to submit any other information or documentation to the issuer. Such letter of credit, or a renewal or replacement thereof, shall remain in effect until the termination of this Agreement. Provided that Orica has made all payments required hereunder, the letter of credit shall be returned in full and not drawn upon by or on behalf of EDC within 120 days after the termination of this Agreement.

Site. Further, at its own expense, Orica shall periodically cause such Ammonia to be analyzed prior to delivery into EDC's storage tank as may be reasonably required by EDC and the report of such analysis shall be provided to EDC upon request. Additional sampling and subsequent analysis of the Ammonia may be conducted by EDC in its discretion in accordance with standard methods of the American Society of Testing Materials, or by such other methods as may be agreed by Orica and EDC. EDC and Orica will retain any samples that such party takes for at least 60 days from the date of delivery to be analyzed if a dispute arises as to the quality of the Ammonia.

Ammonia Specifications, EDC warrants that all AN Solution and AN Prills delivered to Orica from time to time hereunder shall conform to the AN Solution Specifications and Interim or Final ANP Specifications set forth in Schedule "B" hereto, as applicable, except to the extent the failure to meet such Specifications is attributable to the addition or use of Additives. EDC shall have the right to conduct performance tests, in form reasonably acceptable to Orica, on AN Solution and AN Prills produced during the first 90 days of the Term in order to confirm that the Additives supplied by Orica will result in the production of AN meeting the AN Solution Specification and the applicable ANP Specification. Orica shall have the right to witness such tests, and the parties will cooperate in good faith to identify mutually acceptable solutions in the event such tests demonstrate that use of the Additives contribute to the production of non-conforming AN.

irrespective of the supplier. EDC agrees to promptly provide to Orica a copy of such standards and procedures in effect as of the Effective Date, together with copies of any revised standards and procedures subsequently adopted by EDC.

Orica shall be solely responsible for any nonconformance of AN supplied hereunder to the extent caused by the Additives or non-conforming Ammonia. EDC may dispose of any such non-conforming AN returned to it by sale to SEC or agricultural customers.

10.4    Ammonia supplied by pipeline shall be delivered to EDC's Ammonia storage tanks and metered by the metering devices currently utilized at the EDC Site or similar metering devices. Absent demonstrable error, EDC and Orica agree that the amount of Ammonia delivered by pipeline shall be conclusively determined by the delivery receipt provided by the pipeline.

11.0    AN SOLUTION AND AN PRILLS DELIVERY, RISK AND TITLE

quantity of AN Prills and available AN Prills storage capacity in the Warehouse. ***

11.3    Title to all AN Solution and AN Prills manufactured hereunder shall be in Orica upon and after the earlier of (a) delivery of the AN into Orica's trucks or railcars, or (b) following its construction, delivery of the AN Prills to the AN Prills Warehouse. EDC shall use commercially reasonable efforts to physically segregate all AN Solution and AN Prills manufactured for Orica from all ▇▇▇▇, and other AN solution located at the EDC Site, and shall install signage and otherwise clearly ▇▇▇▇ Orica's AN Solution and AN Prills as the property of Orica to the reasonable satisfaction of Orica. Delivery of AN to Orica shall occur and all risks of loss and otherwise in relation thereto shall pass at the earlier of (a) delivery of the AN into Orica's trucks or rail cars at the EDC Site or, (b) following its construction, delivery of the AN Prills to the AN Prills Warehouse.

***INDICATES INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED FROM THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION.  THE OMITTED INFORMATION HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION FOR PURPOSES OF SUCH REQUEST

construction. Following the construction of such Warehouse, Orica shall at all times during the Term have exclusive access to the AN Prills Warehouse storage capacity. The AN Prills Warehouse will be equipped as specified by Orica to ensure AN ▇▇▇▇▇ quality is maintained post-manufacture. Orica shall be permitted to store its AN Prills in the AN Prills Warehouse at all times and the costs relating to the operation thereof shall be charged by EDC as Additional Operating Costs. The contents of the AN Prills Warehouse shall be clearly marked by appropriate signage as being the property of Orica, to the reasonable satisfaction of Orica.

reflecting payment by EDC), as the case may be, for all sales, value added or transfer taxes or Governmental fees levied or imposed, or charges or costs payable to a Government and attributable to compliance with Governmental orders or Laws issued or adopted after the date hereof, in connection with the supply of services hereunder; provided that in no event shall such amount include amounts relating to fines and penalties or fees and expenses arising therefrom or income taxes payable by EDC. EDC may, where required by Laws, collect from Orica any such tax, fee, charge or other cost and remit it to the appropriate Government. Any such tax, fee, charge or other cost shall be paid by Orica in addition to the Manufacturing Fee to be paid hereunder. If any such tax or fee paid by Orica is adjusted as a result of any reassessment by any Government, then any increase or decrease in any such tax or fee and any interest and penalties (except to the extent attributable to the negligence of EDC) resulting from the reassessment is for Orica's account.
 

If an event of Force Majeure occurs, the party whose performance is excused shall immediately provide written notice to the other party of the event of Force Majeure, the nature of the event, the extent to which the event of Force Majeure affects or delays the affected party's performance hereunder, the particular obligations so affected, the steps taken and proposed to be taken to lessen and cure the Force Majeure, and the estimated duration of the event of Force Majeure. If there is any material change, addition or alteration to the circumstances giving rise to, or in the information provided pursuant to, the written notice, the affected party shall provide the other party with written notice of the same.

At all times during an event of Force Majeure, both parties shall use reasonable means to avoid or minimize the consequences of any event of Force Majeure; provided that nothing contained in this Agreement shall be construed as requiring either party hereto to accede to the demands of labor or labor unions it considers unreasonable. The performance of this Agreement shall be resumed as soon as practicable after such disability has been removed.
15.2    If an event of Force Majeure impairs EDC's ability to produce nitric acid or deliver AN Solution under this Agreement, EDC shall allocate its available production of nitric acid and AN Solution manufactured at EDC's Site and available for supply among all of EDC's customers then supplied or which are customarily supplied from EDC's Site, including Orica, EDC and Affiliates of EDC. This
 

prorating shall be based on EDC's existing contracts for sale of nitric acid or AN Solution and the previously forecasted requirements of such customers for the period of the Force Majeure.

16.2    If an event of Force Majeure claimed by EDC or Orica persists for a continuous period of at least one hundred eighty (180) days or if the duration of an event of Force Majeure claimed by EDC or Orica is estimated by the party claiming Force Majeure to be one hundred eighty (180) days or longer, then the party not claiming the Force Majeure shall have the right, but not the obligation, to terminate this Agreement and the obligations of the parties hereto, except for claims in dispute and payments and other obligations then due and owing, by giving written notice of termination to the other party. For purposes of this Subsection 16.2, if the period between the end of one event of Force Majeure and the commencement of another event of Force Majeure is less than 30 days, the Force Majeure shall be deemed to be continuous, but the time between the Force Majeure periods shall not be counted in determining the one hundred eighty (180) day period required before termination hereunder is allowed.

16.3    EDC may terminate this Agreement on 14 days prior written notice to Orica if Orica delivers ammonia to EDC which does not meet Ammonia Specifications and if, after EDC has given notice to Orica pursuant to Subsection 6.3, Orica has not within 45 days of receipt of such notice, commenced deliveries of Ammonia meeting the Ammonia Specifications.

Orica may terminate this Agreement on 14 days prior written notice to EDC if EDC delivers AN solution or AN prills to Orica which do not meet the AN Solution Specifications or AN ▇▇▇▇▇ Specifications, respectively, and if, after Orica has given notice to EDC pursuant to Subsection 7.3, EDC has not within 45 days of receipt of such notice, commenced delivery of at least 95%
 

of the prior volumes of AN Solution or AN Prills which meet the relevant Specifications.
16.4    Either party may terminate this Agreement if the other party defaults in the due and punctual payment of any amounts owing to it or fails to perform any material obligation and such default or failure continues for 30 days after it gives written notice to the defaulting party advising of the default or failure and the intention to terminate this Agreement in the absence of payment or performance.
16.5    Either party may terminate this Agreement pursuant to a notice given in accordance with Subsection 27.2 hereof.
16.6    Orica may terminate this Agreement upon five days prior notice to EDC in the event (a) of major damage to, destruction of, or a loss of production capacity at, EDC's Plant, and (b)(i) within 180 days of such damage, destruction or loss of production capacity, EDC's Plant is not or cannot be restored to a level of production sufficient to meet the Minimum Quantity requirement, as determined by Orica acting in good faith and after consultation with EDC, or (ii) the cost to repair such damage, rebuild the Plant or restore the production capacity (after taking into account any insurance recovery by EDC) will result in an increase in the Manufacturing Fee. Nothing in this Section 16.6 shall be deemed to prevent EDC from repairing such damage, rebuilding the Plant or restoring its production capacity at its sole cost within a 180-day period, in which event such costs shall not be included in the Manufacturing Fee and Orica shall have no right to terminate under this Section 16.6.
16.7    The termination of this Agreement for any cause whatsoever shall not release a party from any liability which at the time of termination has already accrued to the other party or which may thereafter accrue in respect of any act or omission prior to termination.
16.8    The rights and remedies of the parties under this Agreement are cumulative and, subject to the limitations expressed in this Agreement, the exercise of a remedy by a party shall not preclude the right of such party to exercise any other remedy available to such party in accordance with the terms of this Agreement or otherwise.
17.0    HARDSHIP
17.1    If, at any time during the term of this Agreement, there occurs a substantial change in the business, technical or commercial conditions which adversely affects the business or financial condition of either party to this Agreement, or a substantial change in Laws applicable to this Agreement or its performance by either party, as a result of which a party incurs or would be likely to incur substantial hardship in complying with the provisions of this Agreement, the party experiencing hardship may notify the other in writing that it wishes to
 

discuss the terms and performance of this Agreement in light of such changed conditions.

EDC shall provide coverage on a Commercial General Liability Occurrence Coverage Form CG 00 01 01 96 (or equivalent) with limits of not less than $1,000,000 each occurrence, $1,000,000 products/completed operations aggregate, $1,000,000 personal injury aggregate and $2,000,000 general aggregate with deductibles and/or self-insured retentions determined by EDC in the exercise of its reasonable discretion. Railroad Protective Liability is to be included if that exposure exists. Limit of Liability for railroad protective liability required is not less than $5,000,000 per occurrence and in the aggregate. Any exclusions or amendments to the policy form must be disclosed by EDC. EDC's policy shall be specifically endorsed with Form CG 20 10 10 93 (or equivalent) to include Orica, its directors, officers and employees, as an Additional Insured. EDC's policy shall be specifically endorsed with form CG 24 02 10 93 (or equivalent) to waive any rights of subrogation against Orica.

EDC shall provide coverage on a Business Auto Policy Form CA 00 01 12 93 (or equivalent) for "Any Auto" (auto symbol #1) with a limit of liability in an amount no less than $1,000,000 each accident with deductibles and/or self-insured retentions determined by EDC in the exercise of its reasonable discretion. EDC shall provide a copy of such policy to Orica promptly after the date hereof.

18.1.3     Workers' Compensation Insurance

EDC shall provide coverage on Workers' Compensation Form ▇▇ ▇▇ ▇▇ ▇▇ ▇ 4 92 (or equivalent) in accordance with the laws of the State of Arkansas, and

---

any other applicable jurisdiction, covering all employees who are engaged by EDC in performing its obligations under this Agreement. Employer's Liability coverage is required with the limits of not less than the following:

Bodily Injury by Accident $1,000,000 Each Accident

Bodily Injury by Disease $1,000,000 Each Employee

Bodily Injury by Disease $1,000,000 Policy Limit

EDC's policy shall be specifically endorsed with Form WC 00 03 13 (or equivalent) to waive any rights of subrogation against Orica. EDC will specifically be required to provide coverage under the Federal Employers Liability Act (FELA), if required, as FELA applies to interstate railroad employees.

18.1.4 Excess Liability Insurance

EDC shall provide Umbrella Liability coverage with a limit of liability no less than $10,000,000 each occurrence, and $10,000,000 aggregate.

18.1.5 Business Interruption Insurance

EDC shall maintain business interruption coverage without limit of liability.but with deductibles or self-insurance retentions determined by EDC in the exercise of its reasonable discretion. If a business interruption event occurs at the EDC Plant or EDC Site which adversely impacts EDC's ability to manufacture and deliver AN to Orica, EDC shall seek recovery under its business interruption insurance for all Claims arising or resulting therefrom including, without limitation, Manufacturing Fees which would have been paid by Orica had such AN been manufactured and delivered. Orica shall not seek recovery for any Claims under EDC's business interruption insurance.

18.1.6 Property Insurance

EDC shall provide property insurance (including business interruption insurance) covering all risks of loss and damage to the EDC Plant and EDC Site, including but not limited to plant, equipment, real property, personal property, tools, machinery and electronic data processing equipment. Coverage shall also be provided for any property which is in EDC's care, custody or control, and for which EDC is legally responsible. Insurance valuation shall be for replacement cost with deductibles or self-insurance retentions determined by EDC in the exercise of its reasonable discretion. EDC shall provide a copy of such policies to Orica promptly after the date hereof.

18.1.7 Environmental Impairment Liability (EIL) Insurance

EDC has, as of the Effective Date, EIL insurance coverage with an aggregate limit of liability of $20,000,000, subject to certain deductibles and/or self-insured retentions. At the request and expense of Orica, EDC's EIL policy shall be specifically endorsed to include Orica as an Additional Named Insured with regard to exposures in which Orica has a financial interest or for which Orica has or may have any liability. EDC's policy shall be specifically endorsed to waive any rights of subrogation against Orica, its directors, officers and employees.

18.1.8    General Terms

All insurance companies providing the aforesaid coverages to EDC must be authorized to do business in the State of Arkansas. All insurance companies must be rated A- or better with a financial rating of VIII or better in the most recent A.M. Best's Rating Guide. All insurance companies shall provide 30 days prior written notice to Orica of material modification, cancellation or non-renewal of any of the coverages. Certificates of insurance for all required coverages shall be provided to Orica prior to commencement of the Agreement and renewal certificates upon policy renewals. Copies of the required endorsements to the policies also shall be provided to Orica at the same times. 

18.2    Orica shall procure and maintain, at Orica's sole expense, at all times during the term of this Agreement:

Orica shall provide coverage on a Commercial General Liability Occurrence Coverage Form CG 00 01 01 96 (or equivalent) with limits of not less than $1,000,000 each occurrence, $1,000,000 products/completed operations aggregate, $1,000,000 personal injury aggregate and $2,000,000 general aggregate with deductibles and/or self-insured retention determined by Orica in the exercise of its reasonable discretion. Railroad Protective Liability is to be included if that exposure exists. Limit of Liability for railroad protective liability required is not less than $5,000,000 per occurrence and in the aggregate. Any exclusions or amendments to the policy form must be disclosed by Orica. Orica's policy shall be specifically endorsed with Form CG 20 10 10 93 (or equivalent) to include EDC as an Additional Insured. Orica's policy shall be specifically endorsed with form CG 24 02 10 93 (or equivalent) to waive any rights of subrogation against EDC.

18.2.2 Automobile Liability Insurance

Orica shall provide coverage on a Business Auto Policy Form CA 00 01 12 93 (or equivalent) for "Any Auto" (auto symbol #1) with a limit of liability in an amount no less than $1,000,000 each accident with deductibles and/or self-insured retentions

determined by Orica in the exercise of its reasonable discretion. Orica shall provide a certificate of insurance respecting such policies to EDC promptly after the date hereof.

18.2.3 Workers' Compensation Insurance

Orica shall provide coverage on Workers' Compensation Form ▇▇ ▇▇ ▇▇ ▇▇ ▇ 4 92 (or equivalent) in accordance with the laws of the State of Arkansas, and any other applicable jurisdiction, covering all employees who are engaged by Orica in performing its obligations under this Agreement. Employer's Liability coverage is required with the limits of not less than the following:

Bodily Injury by Accident $1,000,000 Each Accident

Bodily Injury by Disease $1,000,000 Each Employee

Bodily Injury by Disease $1,000,000 Policy Limit

Orica's policy shall be specifically endorsed with Form WC 00 03 13 (or equivalent) to waive any rights of subrogation against EDC. Orica will specifically be required to provide coverage under the Federal Employers Liability Act (FELA), if required, as FELA applies to interstate railroad employees.

18.2.4 Excess Liability Insurance

Orica shall provide Umbrella Liability coverage with a limit of liability no less than $10,000,000 each occurrence, and $10,000,000 aggregate.

18.2.5 Business Interruption Insurance

Orica shall provide business interruption insurance coverage relating to its explosives business covering Claims against or incurred by Orica arising as a result of a business interruption event at the EDC Plant or the EDC Site which impacts the ability of EDC to manufacture and deliver AN hereunder to Orica. Orica shall seek recovery under such insurance for all such claims resulting from the event, save and except for (a) the monies which would have been paid by Orica to EDC for AN pursuant to the terms of this Agreement had the AN been delivered to Orica, which monies are addressed in Subsection 18.1.5 hereof, and (b) any deductibles paid to and/or retentions held back by Orica's insurer where Orica has made a claim arising from a business interruption event at the EDC Plant or EDC Site, which deductibles and/or retentions will be reimbursed by EDC to Orica. 

18.2.6    Property Insurance

Orica shall provide property insurance (including business interruption insurance) covering all risks of loss and damage to its property, including but
 

not limited to plant, equipment, real property, personal property, tools, machinery and electronic data processing equipment. Coverage shall also be provided for any property which is in Orica's care, custody or control, and for which Orica is legally responsible. Insurance valuation shall be for replacement cost with deductibles or self-insurance retentions determined by Orica in the exercise of its reasonable discretion. Orica shall provide a certificate of insurance respecting such policies to EDC promptly after the date hereof. 

18.2.7    General

All insurance companies providing the aforesaid coverages to Orica must be authorized to do business in the State of Arkansas. All insurance companies must be rated A or better with a financial rating of VIII or better in the most recent A.M. Best's Rating Guide. All insurance companies shall provide 30 days prior written notice to EDC of material modification, cancellation or non-renewal of any of the coverages. Certificates of insurance for all required coverages shall be provided to EDC prior to commencement of the Agreement and renewal certificates upon policy renewals. Copies of the required endorsements to the policies also shall be provided to EDC at the same times. 

19.0    DISPUTE RESOLUTION

arbitration, agree in writing upon the issue or issues to be arbitrated. The arbitrator(s) shall be instructed to reach a decision based only on the facts and information supplied by the parties during the proceeding. The parties agree that such referral and the arbitration award shall be binding on both parties. Judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. Notwithstanding any of the provisions or limitations of Sections 19.1 or 19.2, any demand for arbitration must be filed in writing with the other party and with the American Arbitration Association prior to the date when institution of legal or equitable proceedings based upon the Dispute would be barred by the applicable statute of repose or limitations.
 

20.1    Each of the parties acknowledges that all non-public business, technical, proprietary or other similar information, including production cost and pricing information and data delivered to it by the other party in the course of entering into, performing or enforcing its rights under this Agreement, as well as the fact and terms of this Agreement, are confidential and shall be treated as confidential and agrees to, and to require its Affiliates, employees, legal, financial and other advisors to, hold such information in strict confidence and to refrain from disclosing or using such information to the detriment of the other party, until the fifth anniversary of the expiration or termination of this Agreement; provided however that a party may disclose confidential information:

(a) if and when required to do so by Laws, provided that the disclosing party shall cooperate with any reasonable requests of the non-disclosing party in connection with a disclosure under this clause (a), including a request to review any securities filings pertaining to the entering into of this Agreement prior to their filing;

(b) to third parties in connection with a proposed sale by such party of its business related to the subject matter of this Agreement, or an interest therein, provided that such third parties agree in writing to keep such information confidential;

(c) which was previously known to it at the time of disclosure as evidenced by pre-existing written materials;

(d) which is received from a third party not under an obligation of confidentiality to the disclosing party with respect to such information as evidenced by pre-existing written materials; or

(e) which has been independently generated by the receiving party without reference to or reliance on any information provided hereunder.

---

20.2    Each party agrees that if it breaches or threatens to breach Section 20.1 or any other confidentiality provision of this Agreement, the other party may be irreparably harmed and the remedy at law may be inadequate, and therefore, without limiting any other remedy available at law or in equity, an injunction, specific performance, or other forms of equitable relief to prevent further use and/or disclosure of confidential information, or money damages, shall be available to the other party. All rights, powers and remedies provided for herein are cumulative, and the other party shall, in addition to the rights, powers and remedies herein conferred, be entitled to avail itself of all such other rights, powers and remedies as may now or hereafter exist.

21.0    SECURITY INTEREST

transportation of AN Prills between EDC's Plant and the AN Prills Warehouse, in each case in violation of any applicable Environmental Law or Environmental Permit;

if to Orica, addressed as follows:

Orica USA Inc.
Attention: VP, Ammonium Nitrate
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇

with a copy to:

Attention: General Counsel
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
at the same address;

and if to EDC, addressed as follows:

El Dorado Chemical Company
Attention: President
16 S. Pennsylvania
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇

with a copy to:

Attention: General Counsel
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇

at the same address.

Either party shall have the right to change its address by notice to the other party at the addresses in force hereunder.
 23.2    Any communications shall be deemed to have been received as follows:
 

greatest extent possible, or, if this is not possible, deleted with the remainder of the Agreement remaining in full force, validity and effect.
 

In the event of a conflict between the terms and provisions of this Agreement and any of Schedules "A" through "H" hereto, the terms and provisions of the applicable Schedule shall govern and control the point in conflict to the extent allowable under applicable Law.

IN WITNESS WHEREOF the parties hereto have executed this Agreement in the presence of their respective officers duly authorized in this regard on the day and Year first above written.

By: _________________________                         By: _________________________
Name:                                                                                 Name:
Title:                                                                                     Title:
 

In the Agreement to which this Schedule is attached and in all Schedules thereto, the following words have the meanings given to such words below:

"Additive Assets" shall have the meaning set forth in Section 3.4 of this Agreement;

"Additive Technology" shall have the meaning set forth in Section 3.6 of this Agreement;

"Additives" means the proprietary and non-proprietary additives provided by Orica to EDC from time to time and used by EDC to manufacture AN Prills for Orica;

"Affiliate" means any person which, directly or indirectly, Controls, is Controlled by or is under common Control with a party to this Agreement;

"▇▇▇▇" means agricultural grade ammonium nitrate manufactured by EDC at the EDC Site, and sometimes known as "E2";

"Agreement" means this Agreement, including the Schedules hereto, and any future amendments or supplements;

"Ammonia" means fertilizer grade anhydrous ammonia (82-0-0) which meets or exceeds the specifications set out in Schedule "B" hereto;

"Ammonium Nitrate" or "AN" means AN Prills and/or AN Solution;

"AN Prills" means industrial grade ammonium nitrate which meets or exceeds the AN Prills Specifications in Schedule "B" hereto;

"AN Prills Warehouse" shall have the meaning set forth in Section 4.6 of this Agreement;

"AN Solution" means ammonium nitrate solution which meets or exceeds the AN Solution Specifications in Schedule "B" hereto, except that "Tons of AN Solution" shall be measured on a one hundred percent (100%) basis;

"Arrangement for Disposal" has the same meaning as given to that term in the case law interpreting Section 107(a)(3) of CERCLA;

"Avoided Costs" shall having the meaning given in Schedule "D" hereto;

"Business Day" means a day on which banking institutions in Denver, Colorado are open for business;

"CERCLA" means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C.  9601(22), and the regulations and agency guidance promulgated thereunder;

"Claim" means any claim, demand, suit, action, cause of action, assessment, loss, cost, expense, liability (whether contingent, fixed or unfixed, liquidated or unliquidated, or otherwise), obligation, fine, penalty, interest, payment, damage, requirement to do work or requirement to perform an activity (whether as a result of civil action, criminal action, Government order or on any other basis whatsoever), including costs or expenses of any and all investigations or proceedings and reasonable fees and expenses of attorneys, accountants and other experts, but excluding special, consequential, incidental or punitive damages claimed by a party to this Agreement;

"Controls", "is Controlled by" and "is under common Control with" means, with respect to either party to this Agreement, the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a party, whether through ownership of voting securities, by contract or otherwise;

"Disposal" has the same meaning as given to that term in CERCLA;

"Dollar" shall mean dollars in United States currency;

"EDC's Plant" or "EDC Plant" means the portion of the EDC Site usable by Orica for the storage of Ammonia pursuant to Section 3.2 of the Agreement,, the portion of the nitric acid production facilities at the EDC Site utilized to supply nitric acid for the production of AN for Orica, the portion of the AN Solution production facilities at the EDC Site utilized to supply AN Solution for the production of AN for Orica, the allocated AN Solution Storage, the portion of the EDC Site dedicated to the manufacture of AN, including the IGAN Plant, the AN Prills Warehouse (once constructed), the portion of the supporting facilities at the EDC Site used to manufacture steam, to unload Ammonia and Additives, to load and ship AN manufactured for Orica and for ingress and egress from the IGAN Plant and any assets that Orica requests EDC to add to the EDC Site as a result of this Agreement;

"EDC's Site" or "EDC Site" means the land and facilities operated by EDC at or near El Dorado, Arkansas for the manufacture of nitric acid, sulfuric acid, ▇▇▇▇, AN Solution and AN Prills;

"Effective Date" means November 1, 2001;

"Environment" means any water or water vapor, any land, including land surface or subsurface, air, fish, wildlife, flora, fauna, biota and all other natural resources;

"Environmental Law" means any and all federal, state or local environmental, land use, zoning, health, chemical use, safety and sanitation laws, statutes, ordinances, codes, and regulations, whether currently in effect or enacted or amended after the effective date of this Agreement, relating to the protection, preservation or remediation of the Environment and/or governing the use, storage, treatment, generation,

transportation, processing, handling, production, Disposal, or Arrangement for Disposal of Hazardous Materials and the rules, regulations, written and published notices, guidelines, decisions, orders and directives of federal, state and local governmental agencies and authorities with respect thereto;

"Environmental Permit" means all permits, licenses, approvals, authorizations, consents or registrations required by any applicable Environmental Law in connection with the ownership, development, construction, equipping, use and/or operation of the EDC Site or the EDC Plant, as applicable, for the storage, treatment, generation, transportation, processing, handling, production or Disposal of Hazardous Materials;

"Force Majeure" means any cause or causes beyond the reasonable control of the party claiming such Force Majeure which prevents the performance by such party of any obligation under the Agreement, other than an obligation to pay money or to indemnify, including, without limiting the generality of the foregoing, acts of God, compliance with Laws, including Environmental Laws, or any order or directive of any Government which, in the reasonable judgement of the party affected, makes it necessary to cease or reduce production or delivery, storm, lightning, riot, sabotage, rebellion, insurrection, war, threat of war, embargo, flood, fire, lightning, accident, explosion, inability to obtain sufficient fuel, transportation equipment, power or raw materials, including specifically Ammonia, to maintain production of AN at EDC's Plant or to deliver AN to Orica's customers, breakdown of machinery or equipment and shutdown or partial shutdown of EDC's Plant, provided that lack of funds shall not be a cause beyond the reasonable control of a party. Labor Difficulties shall be events of Force Majeure if they occur within the regular operations of a party and significantly affect such party's ability to perform its obligations hereunder. Labor Difficulties affecting transportation facilities with respect to both the delivery and supply of goods, raw material supplies and services to EDC's Plant or Orica's customers and Labor Difficulties affecting the operations of Orica's or its Affiliates' (including, without limitation, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, LLC) eastern coal customers shall constitute events of Force Majeure to the extent that such Labor Difficulties affect a party's ability to perform its obligations hereunder;

"Government" means federal, state and municipal governments and authorities, whether executive, administrative, municipal or quasi-judicial, and departments, organizations and agencies of such governments and authorities;

"Hazardous Material" means, without limitation, any element, compound, mixture, solution, substance, product, waste or byproduct designated as "hazardous" or "toxic" or as a pollutant or contaminant pursuant to any Environmental Law or Environmental Permit, and the AN, and any element, compound, mixture, solution, substance, product, waste or byproduct produced therefrom or created thereby;

"IGAN Plant" means the AN ▇▇▇▇▇ tower and related equipment used to manufacture AN Prills located on the EDC Site, sometimes referred to as the "KT Plant";

"Initial Period" means the period from November 1, 2001 to December 31, 2002;

"Labor Difficulties" means strikes and lockouts, both legal and illegal, and other forms of organized actions, howsoever called, by labor or other personnel to stop or significantly reduce or slow-down work or production or to withdraw or withhold labor or services;

"Laws" means common law, statute law, other laws, rules, regulations, by-laws, ordinances, orders, codes, licensing requirements, and other lawful enactments promulgated by any Government and published guidelines or standards set by any Government;

"Month" means a calendar month;

"Plant Turnaround" means the voluntary shutdown by EDC of the EDC Plant for maintenance, repairs or improvements;

"Release" has the same meaning as given to that term in CERCLA;

"Ton" means 2000 pounds;

"Manufacturing Fee" shall mean, as the context requires, the *** or the *** determined in accordance with Schedule "C" hereto; and

"Year" means a 12 month period beginning each January 1^st and ending on December 31^st.

***INDICATES INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED FROM THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION.  THE OMITTED INFORMATION HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION FOR PURPOSES OF SUCH REQUEST